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Republic of the Philippines . . .

comply with the obligation to pay the


SUPREME COURT amount of P5,000.00 representing
Manila balance of the purchase price of a parcel
of land known as Lot 7-K-2-G, Psd-26193,
EN BANC with an area of 2191 square meters,
G.R. No. L-18411 December 17, 1966 Quezon City, covered by Transfer
Certificate of Title No. 13 (6947), Quezon
MAGDALENA ESTATES, INC., plaintiff-
City, within a period of sixty (60) days
appellee,
from January 7, 1957; That the Surety
vs.
shall be notified in writing within Ten
ANTONIO A. RODRIGUEZ and HERMINIA C.
(10) days from moment of default
RODRIGUEZ, defendants-appellants.
otherwise, this undertaking is
Roxas and Sarmiento for plaintiff-appelle. automatically null and void.
Somero, Baclig and Savello for defendants-
On June 20, 1958, when the obligation of the
appellants.
appellants became due and demandable, the
REGALA, J.: Luzon Surety Co., Inc. paid to the appellee the
Appeal from the decision of the Court of First sum of P5,000.00. Subsequently, the appellee
Instance of Manila ordering the defendants- demanded from the appellants the payment of
appellants to pay jointly and severally to the P655.89 corresponding to the alleged
plaintiff-appellee the sum of P655.89, plus legal accumulated interests on the principal of
interest thereon from date of the judicial P5,000.00. Due to the refusal of the appellants
demand, the sum of P100.00 as attorney's fees, to pay the said interest, the appellee started
and to pay the costs. this suit in the Municipal Court of Manila to
enforce the collection thereof. The said court,
The appellants bought from the appellee a on February 5, 1959, rendered judgment in
parcel of land in Quezon City known as Lot 7-K- favor of the appellee and against the
2-G, Psd-26193. In view of an unpaid balance of appellants, ordering the latter to pay jointly and
P5,000.00 on account of the purchase price of severally the appellee the sum of P655.89 with
the lot, the appellants executed on January 4, interest thereon at the legal rate from
1957, the following promissory note November 10, 1958, the date of the filing of the
representing the said account: complaint, until the whole amount is fully paid.
Not satisfied with that judgment, appellants
PROMISSORY NOTE appealed to the Court of First Instance of
Manila, where the case was submitted for
decision on the pleadings. The Court of First
P5,000.00
Instance of Manila rendered the judgment
stated at the outset of this decision.
Manila, January 4, 1957 On appeal directly to this Court, the following
errors are assigned:
We, the Spouses ANTONIO A. RODRIGUEZ and I. The lower court erred in concluding as
HERMINIA C. RODRIGUEZ, jointly and severally a fact from the pleadings that the
promise to pay the Magdalena Estates, Inc., or plaintiff-appellee demanded, and the
order, at its offices in the City of Manila, Luzon Surety Co., Inc. refused, the
without any demand the sum of FIVE payment of interest in the amount of
THOUSAND PESOS (P5,000.00), Philippine P655.89, and in not finding and declaring
currency, with interest at the rate of Nine Per that said plaintiff-appellee waived or
Cent 9% per annum, within sixty (60) days condoned the said interests.
from January 7, 1957. The sum of P5,000.00
II. The lower court erred in not finding
represents the balance of the purchase price
and declaring that the obligation of the
of the parcel of land known as Lot 7-K-2-G,
defendants-appellants in favor of the
Psd. 26193, containing an area of 2,191
plaintiff-appellee was totally
square meters, Quezon City.
extinguished by payment and/or
condonation.
(Sgd.) Antonio A. Rodriguez III. The lower court erred in not finding
( T ) ANTONIO A. RODRIGUEZ and declaring that the promissory note
executed by the defendants-appellants
(Sgd.) Herminia C. Rodriguez in favor of the plaintiff-appellee was,
( T ) HERMINIA C. RODRIGUEZ insofar as the said document provided
for the payment of interests, novated
Signed in the Presence of: when the plaintiff-appellee unqualifiedly
accepted the surety bond which merely
(Sgd.) ILLEGIBLE guaranteed payment of the principal in
the sum of P5,000.00.
(Sgd.) ILLEGIBLE
Appellants claim that the pleadings do not
show that there was demand made by the
On the same date, the appellants and the
appellee for the payment of accrued interest
Luzon Surety Co., Inc. executed a bond in favor
and what could be deduced therefrom was
of the appellee, the undertaking thereof being
merely that the appellee demanded from the
embodied therein as follows:
Luzon Surety Co., Inc., in the capacity of the
latter as surety, the payment of the obligation
of the appellants, and said appellee accepted old and new contracts are incompatible in all
unqualifiedly the amount of P5,000.00 as points, or that the will to novate appears by
performance by the obligor and/or obligors of express agreement of the parties or in acts of
the obligation in its favor. It is further claimed similar import.4
that the unqualified acceptance of payment An obligation to pay a sum of money is not
made by the Luzon Surety Co., Inc. of novated, in a new instrument wherein the old is
P5,000.00 or only the amount of the principal ratified, by changing only the terms of payment
obligation and without exercising its and adding other obligations not incompatible
(appellee's) right to apply a portion of P655.89with the old one,5 or wherein the old contract is
thereof to the payment of the alleged interest merely supplemented by the new one.6 The
due despite its presumed knowledge of its right mere fact that the creditor receives a guaranty
to do so, the appellee showed that it waived or or accepts payments from a third person who
condoned the interests due, because Articles has agreed to assume the obligation, when
1235 and 1253 of the Civil Code provide: there is no agreement that the first debtor shall
ART. 1235. When the obligee accepts the be released from responsibility does not
performance, knowing its constitute a novation, and the creditor can still
incompleteness or irregularity, and enforce the obligation against the original
without expressing any protest or debtor. (Straight v. Haskel, 49 Phil. 614; Pacific
objection, the obligation is deemed fully Commercial Co. v. Sotto, 34 Phil. 237; Estate of
complied with. Mota v. Serra, 47 Phil. 464; Duñgo v. Lopena,
ART. 1253. If the debt produces interest, supra ). In the instant case, the surety bond is
payment of the principal shall not be not a new and separate contract but an
deemed to have been made until the accessory of the promissory note.
interests have been recovered. WHEREFORE, the judgment appealed from
We do not agree with the contention of the should be, as it is hereby, affirmed, with costs
appellants. It is very clear in the promissory against the appellants.
note that the principal obligation is the balance Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon,
of the purchase price of the parcel of land Makalintal, Bengzon, J.P., Zaldivar, Sanchez
known as Lot 7-K-2-G, Psd-26193, which is the and Castro, JJ., concur.
sum of P5,000.00, and in the surety bond, the Footnotes
Luzon Surety Co., Inc. undertook "to pay the 1
amount of P5,000.00 representing balance of La Insular v. Machuaca Go Tauco, 39 Phil.
the purchase price of a parcel of land known as 567.
2
Socony-Vacuum Corp. v. Miraflores, 67 Phil.
Lot 7-K-2-G, Psd-26193, . . . ." The appellee did
304.
not protest nor object when it accepted the 3
Baltazar v. Lingayen Gulf Electric Co., Inc.,
payment of P5,000.00 because it knew that G.R. Nos. L-16236-38, June 30, 1965.
that was the complete amount undertaken by 4
Martinez v. Cavives, 25 Phil. 581; Tiu Sinco
the surety as appearing in the contract. The v. Havana, 45 Phil. 417; Asia Banking
liability of a surety is not extended, by Corporation v. Lacson, 48 Phil. 482; Pascual
implication, beyond the terms of his contract.1 v. Lacsamana, 53 O.G. 2467; Duñgo v.
It is for the same reason that the appellee Lopena, et al., G.R. No. L-18377, Dec. 29,
cannot apply a part of the P5,000.00 as 1962.
5
payment for the accrued interest. Appellants Inchausti v. Yulo, 34 Phil. 978; Pablo v.
Sapungan, 71 Phil. 145.
are relying on Article 1253 of the Civil Code, 6
Ramos v. Gibbon, 67 Phil. 371; Duñgo v.
but the rules contained in Articles 1252 to 1254 Lopena, supra.
of the Civil Code apply to a person owing
several debts of the same kind of a single
creditor. They cannot be made applicable to a
person whose obligation as a mere surety is
both contingent and singular; his liability is
confined to such obligation, and he is entitled
to have all payments made applied exclusively
to said application and to no other.2 Besides,
Article 1253 of the Civil Code is merely
directory, and not mandatory.3 Inasmuch as the
appellee cannot protest for non-payment of the
interest when it accepted the amount of
P5,000.00 from the Luzon Surety Co., Inc., nor
apply a part of that amount as payment for the
interest, we cannot now say that there was a
waiver or condonation on the interest due.
It is claimed that there was a novation and/or
modification of the obligation of the appellants
in favor of the appellee because the appellee
accepted without reservation the subsequent
agreement set forth in the surety bond despite
its failure to provide that it also guaranteed
payment of accruing interest.
The rule is settled that novation by
presumption has never been favored. To be
sustained, it needs to be established that the